The chart above, from the insightful Petromatrix report, highlights the on-going divergence between the bullish sentiment driving prices, and the fundamental reality of crude oil markets.
It totals US stocks of crude oil and the main products (gasoline, distillate and jet kero), by year. And it shows very clearly that stocks in 2010 (red line) and 2009 (light blue) have been much higher than in the 2005-8 period. As Petromatrix comment:
• "Stocks remain at multi-year highs", even though last year's major destocking has now finished.
• "There is no stress on the supply system because OPEC is gently lowering its compliance to quota as demand gently comes back".
• US Gulf "crude oil imports are at the highest level in 12 months.
They conclude that current prices "put the demand recovery at risk". And they also note that "the extreme spread between crude and natgas also means that petchems will switch as much as possible from petroleum based to natural gas based feedstocks", causing further demand destruction in the short-term.